The Official Budget 2016 thread

[heyya99]

Shhhhhhhhhhhh

A paranoid person might think you're trying to talk contractors into going perm to lessen the competition.

[TheCyclingProgrammer]

Rather, it did sound like a good plan until they redrafted the Transactions in Securities legislation, applicable from April. I'm not aware of any updates to the situation that a permie working in the same area is potentially liable for a retrospective refusal of ER for carrying on the same "activity".

AFAIK this has not been confirmed anywhere and is just one person's opinion. Not one I agree with. A permie position is not a business activity or trading. Its a job, nothing more. Only time will tell how this is going to pan out but clearly the aim here is to stop those who regularly shut down their company to gain a tax advantage and then simply start up again doing the same thing. I don't think its intended to penalise those who are genuinely ceasing trading (whether that's to take a permie job or for any other reason).

Aren't we still waiting to hear HMRC's response to the consultation?

[northernladuk]

A paranoid person might think you're trying to talk contractors into going perm to lessen the competition.

I was thinking more along the line of toying with the lazy and feckless....

[jamesbrown]

AFAIK this has not been confirmed anywhere and is just one person's opinion. Not one I agree with. A permie position is not a business activity or trading. Its a job, nothing more. Only time will tell how this is going to pan out but clearly the aim here is to stop those who regularly shut down their company to gain a tax advantage and then simply start up again doing the same thing. I don't think its intended to penalise those who are genuinely ceasing trading (whether that's to take a permie job or for any other reason).

Aren't we still waiting to hear HMRC's response to the consultation?

Yes, we're waiting for the results from the consultation. The problem is as follows. Unless they explicitly legislate a definition of "activity" (it isn't "business activity", it's "activity"), different opinions (including those of HMRC) are inevitable, and intentions can change (HMRC have form on this). Thus, anyone intending to receive a capital distribution from a voluntary liquidation cannot be sure about the future interpretation of "activity" until: 1) it is clarified in legislation; or 2) it is clarified through case law. Your opinion is worth pretty much the same as mine or any other opinion, i.e. not a whole lot, and that's a rather tenuous position on which to stake a very large capital distribution post April.

[AtW]

Aren't we still waiting to hear HMRC's response to the consultation?

[ChimpMaster]

Yes, we're waiting for the results from the consultation. The problem is as follows. Unless they explicitly legislate a definition of "activity" (it isn't "business activity", it's "activity"), different opinions (including those of HMRC) are inevitable, and intentions can change (HMRC have form on this). Thus, anyone intending to receive a capital distribution from a voluntary liquidation cannot be sure about the future interpretation of "activity" until: 1) it is clarified in legislation; or 2) it is clarified through case law. Your opinion is worth pretty much the same as mine or any other opinion, i.e. not a whole lot, and that's a rather tenuous position on which to stake a very large capital distribution post April.

CGT reducing down to 20% will take some of the pain off it, though it's still double the 10% ER rate.

Or, if ER is denied then the liquidation proceeds are denied as capital gains as a whole, i.e. must be taken as income? The mind boggles.

[AtW]

CGT reducing down to 20% will take some of the pain off it, though it's still double the 10% ER rate.

Or, if ER is denied then the liquidation proceeds are denied as capital gains as a whole, i.e. must be taken as income? The mind boggles.

AFAIK they denied treatment of that money for capital gains purposes, so it won't be 20% CGT either.

[bobspud]

I think there are far too many headless chickens on this thread and the hysteria needs to stop...

if a Social Worker can win an IR35 investigation in what can only be described as one of the most tightly controlled professions that there is, then the rest of you that are sat in government based IT project work will be fine.

You are also missing a really bloody obvious point:

IR35 hinges on this case as part of the definition of employed vs freelance:

https://en.wikipedia.org/wiki/Ready_...onal_Insurance

Up until this week its been our problem to make sure we are outside IR35 and it gets bloody when we are wrong.

BUT

Now its the department that gets to make the in/out decision its also going to be their fault when they get it wrong and the great thing is that they can be wrong in many directions, opening up a whole ambulance chasing industry of claiming back wrongly deducted money from companies that were wrongly engaged as inside IR35 while they are really outside IR35.

All a contractor needs is a government department to tell them that they are inside IR35, only to then break one of the three indicators of an employee/er relationship.

The best example of this will be the Mutually of Obligation.

So when they then tell you that they don't want you for 2 weeks over christmas so you are not getting paid for that time or they remove you from site when your project is finished.

They actually shoot themselves in the foot with the very thing that makes you a good flexible resource when you are outside IR35...

[jamesbrown]

CGT reducing down to 20% will take some of the pain off it, though it's still double the 10% ER rate.

Or, if ER is denied then the liquidation proceeds are denied as capital gains as a whole, i.e. must be taken as income? The mind boggles.

This isn't about ER, which has quite clear rules (that remain easy to meet). It's about having a capital distribution reclassified as a dividend distribution.

[AtW]

This isn't about ER, which has quite clear rules (that remain easy to meet). It's about having a capital distribution reclassified as a dividend distribution.

Yup, at the increased dividend tax rates too